In trading, volume refers to the number of trades executed within a particular time frame. It’s a direct indication of the asset’s supply and demand.
By measuring the volume of trading, volume indicators indicate whether a trend is likely to last.
For example, high volume on the uptrend indicates high demand and therefore, a further price increase. It works the same way in the reversed scenario: high volume on the downtrend indicates high supply and a likelihood of a further price drop.
The Volume Price Trend (VPT) indicator combines price movement with volume to give a cumulative measure of the trend. It is similar to the On-Balance Volume (OBV) indicator but adds a weighting of the price change relative to the volume. This helps identify the strength of a trend by considering both price and volume together.
The Rolling VWAP (Volume-Weighted Average Price) is a variation of the standard VWAP that calculates the VWAP over a rolling (fixed-length) period instead of resetting at the start of each trading session. This makes it useful for tracking VWAP trends over intraday or multi-day periods.